Low-income homes draw young professionals in Denver

DENVER — Many people filling this city's newest affordable housing aren't the ethnic minorities and women with children that some Denver developers envisioned helping.

Of the 98 low-income homes built since 2002 under a controversial affordable-housing ordinance, most "are younger, first-time home buyers who are yet to start a family," a recently released analysis shows.

Nearly 60 percent live alone. Although the city hasn't tracked buyers' race, officials believe a substantial number are white.

Owners represent 21 occupations, with the top three being education and job training, administrative and office, and protective services.

"Teachers, hospital residents, secretaries and police officers," said Jacky Morales-Ferrand, head of Denver's department of Housing and Neighborhood Development Services. "Sounds like the kind of people working in Denver who we want living in Denver."

But to developer Wally Hultin, they also sound like people who could be on track to double, or even triple, their incomes in five to 10 years.

"I have a hard time believing this is what the ordinance is meant to accomplish," he said.

To what degree government should force construction of low-income homes is the subject of publicly polite -- and privately fierce -- debate among housing advocates and developers.

No one attuned to the discussions is ready to attribute overwhelming success to the middle ground forged so far: the 2-year-old Denver ordinance requiring developers to reserve 10 percent of homes in projects of 30 homes or more for buyers or renters earning less than Denver's annual median income of $56,311.

Denver is among 128 jurisdictions in 10 states that have implemented "inclusionary housing" ordinances. Boulder and Longmont are the only other Colorado cities with similar statutes.

Ordinances nationwide are similarly structured but are not identical. Denver's ordinance is considered relatively lenient. It requires less of an affordable set-aside than other cities, such as Davis, Calif., where some developers of 10 or more units must reserve at least 30 percent for low-income buyers.

Denver also mandates that affordable homes remain in the program for 15 years -- while affordable housing must retain that status permanently in Highland Park, Ill.

Though Morales-Ferrand, a staunch supporter of the ordinance, thinks developers such as Hultin should be glad they're not doing business in other cities, she agrees Denver's rules should be tweaked "quite a bit."

"We know there is a disconnect between what developers can produce and the needs that should be met," she said. Still, Morales-Ferrand is excited that the first homes to be developed under the ordinance are forcing people to reconsider stereotypes of low- income residents.

"The people who live in those units qualify to be there," said Morales-Ferrand. "Eventually, we want to get to people who are locked into that income range and not as upwardly mobile."

Families aren't snapping up much of the affordable housing built under the ordinance, because it isn't configured to meet their needs, Morales-Ferrand said.

The city's report shows that half of the 98 affordable homes studied are detached, while the rest are in multiple-unit buildings. Most of the 138 low-income homes expected to be built in the next five years also will be attached.

Seventy homes will have one bedroom, and 55 will have two bedrooms. The ordinance requires the mix of affordable homes to compare to the ratio of one-, two- and three-bedrooms planned for sale at full price.

"Regardless of what they're charging, developers aren't building aggressively for families right now," Morales-Ferrand said.

And downtown builders aren't likely to start soon, said Hultin, principal of Byers Street Properties. His company built affordable housing in its upscale Downing Street Station under an agreement made before the ordinance's passage.

A year after eight affordable, 700-square-foot units were put on the market, five are still for sale, Hultin said.

The affordable condos are priced at $140,000, while the other units fetch more than $300,000. He concedes he and his partners could have been smarter marketers of the affordable units, but he believes economics are more to blame for the sluggish sales.

"What you can afford to produce downtown is not going to be what a lot of people want or need," Hultin said. "I'd like to think the city will come up with a way to help developers avoid the brain damage of building homes that are anything less than ideal."

Developers raise other questions that Morales-Ferrand agrees are worth exploring.

"No one disputes the need for affordable housing," said James Fitzpatrick of Corum Real Estate Group, developer of the swanky Premier Lofts at 2200 Market St. "But should (construction professionals) be the only ones responsible for addressing it?"